What Is Blockchain 2.0 (and Why Should Food Manufacturers Care)?
This article originally appeared on NIST’s Manufacturing Innovation Blog and is reposted here with permission.
Believe it or not, the technology that brought you Bitcoin is beginning to make waves in the food manufacturing industry.
This technology, called blockchain, is a digital ledger maintained across several computers, then linked through a peer-to-peer network. The system’s design makes it difficult to change, hack or modify the data.
In the past few years, however, this service—initially designed to protect cryptocurrency investments—has been revamped as Blockchain 2.0, allowing the same security to be available for transactions of any kind.
This 2.0 design is known as Blockchain as a Service (or BaaS).
Benefits of Blockchain 2.0
In 2020, many flaws in the current food supply chain were exposed, not only in America, but globally.
Pandemic panic buying led to food shortages around the world resulting in a rise in theft, fraud and counterfeiting—three sure ways to increase food-borne illness outbreaks.
The benefits of blockchain become obvious in the event of a food-borne illness outbreak. Traceability can be reduced to seconds, so the response is greatly accelerated, potential product loss is minimized and long-range costs and damage to the brand can be significantly reduced.
Food manufacturers that have adopted traceability systems always benefit financially from the insights it provides into operations. It breaks down along three areas:
- Before: Traceability provides more and better information about your supplier and supplies, including data from raw produce and ingredient origins, until it arrives at the facility.
- During: You will have more accurate information about what happens within your operation, both in times of crisis and profitability. This data provides actionable operational insights that can be easily connected to financial performance. Data at this level allows for better production forecasting, thus leading to more sound budgeting and ordering of ingredients.
- After: Traceability shows what happens to the ingredients or products after they leave your facility. Should a foodborne illness outbreak occur, it is easier to determine where the break in the chain happened.
Challenges of Blockchain 2.0
There are some challenges to implementing a BaaS system into your facility, such as costs associated with implementation and ongoing usage, potential consultation services prior to implementation, resources to commit to the implementation process, and whether or not the technology is widely accepted among your manufacturing ecosystem.
- Startup: Because blockchain is a new advancement, many food manufacturers require industry-specific assistance to determine if BaaS is a cost-effective option. Also, as a feature-dependent technology, the final price will vary in accordance with the project requirements. Beyond the initial consultation and set up, ongoing costs could include maintenance and upgrades, accessibility needs, and training and support for users.
- Bandwidth: Looking toward the future at this time could be a daunting task. There could be other pressing industry or facility-specific concerns that are taking up the bandwidth required to vet BaaS as an opportunity.
- Adoption: Because the food chain is so closely linked with other stakeholders, implementing technology that is not widely accepted by your partners can often complicate communications, making it difficult to justify the investment in early adoption.
Readiness for Blockchain 2.0
Evaluating both the benefits and challenges associated with moving toward a BaaS tracking system should help you progress in the decision-making process.
However, before you pull the trigger, there are a few more evaluation tools to consider.
- Current Customers: Would your current suppliers benefit from the digital documentation you could provide? Knowing that there is an immediate benefit could be an indicator of readiness.
- Future Customers: Do you have a goal of contracting with early adopters or landing contracts with big-box stores? If either of these are among your short-term growth plan, then preparing now will set you up for future success.
- Digital Experience: Has any part of your manufacturing facility moved toward digitization? If Industry 4.0 technologies are not new to you, then you may already be set up for a smooth implementation.
Questions About Blockchain 2.0
Blockchain 2.0 is just the beginning in terms of elevating the tracking capabilities for food manufacturers.
If you are considering implementing this technology, you can plan for the future through early adoption and can also reduce costs in your compliance and partner relationships, all while securing a single source of truth for your facility.
Not sure if Blockchain 2.0 is right for you or where to start if it is? Reach out to CONNSTEP, the official Manufacturing Extension Partnership representative for Connecticut, for more insights and informational resources.
About the author: Julia Canale is a food industry safety, compliance, and regulatory specialist at the New Jersey Manufacturing Extension Program.
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